28 March 2024
Understanding the value of an Eastern Mediterranean gas development in a very uncertain environment
Publication date: 11 March 2020
Gas Strategies Group
10 Saint Bride Street
London UK
EC4A 4AD
ISSN: 0964-8496
Twitter @GasStrategies
Editorials
Subscriptions
A development bank approached us for guidance as to whether it should invest in a key upstream gas development in the Eastern Mediterranean. In addition to having doubts about the role the asset would play in a rapidly developing regional energy market, our client was also facing internal challenge over whether it should be investing in gas projects rather than renewable energy developments.
In order to address those concerns, the bank wanted to improve its understanding of the importance of gas for the energy security and future economic development of the Eastern Mediterranean.
The planned development has significant implications for gas supply in the Eastern Mediterranean and beyond. We carried out a market assessment to put the project within the context of the broader energy market. We considered potential competition from other gas developments, the speed at which changes in demand for gas might happen, the impact of new infrastructure and regulation, and the potential to export the gas outside the region as LNG.
We also considered the role of gas within the Eastern Mediterranean’s energy mix to understand its potential impact on regional development. We analysed the difference between scenarios in which the region was gas rich and gas poor to assess the effect on the affordability of energy, the emergence of alternative power sources and wider economic development.
Our analysis showed that the value of the asset in question was in different areas than those initially identified by the client.
With our help, the client team was able to make an informed judgement on this particular investment opportunity, recognising the risks and opportunities associated with the Eastern Mediterranean gas market.